Zoe's Dog Biscuits, Inc. has net cash flows from operating activities for the last year of $226 million. The income statement shows that net income is $150 million and depreciation expense is $85 million. During the year, the change in inventory on the balance sheet was an increase of $14 million, change in accrued wages and taxes was an increase of $15 million and change in accounts payable was an increase of $10 million. At the beginning of the year the balance of accounts receivable was $45 million. What was the end of year balance for accounts receivable?
A) $20 million
B) $25 million
C) $45 million
D) $65 million

Question

Quizplus · Accepted Answer

The end of year balance for accounts receivable can be calculated by adjusting the net cash flows from operating activities with changes in working capital and adding back non-cash expenses. The calculation is as follows: Net income ($150 million) + Depreciation ($85 million) + Increase in inventory (-$14 million) + Increase in accrued wages and taxes (-$15 million) + Increase in accounts payable ($10 million) = $216 million in cash flows before changes in accounts receivable. Since the net cash flows from operating activities are $226 million, this implies an increase in accounts receivable of $10 million ($226 million - $216 million). Therefore, the end of year balance for accounts receivable is $45 million (beginning balance) + $10 million (increase) = $55 million. However, since this option is not available, it appears there was a mistake in the calculation or in the provided options. Based on the provided options, none directly match the calculated result, suggesting a need to reevaluate the calculation or the options given.